A few years ago there were a number of automotive manufacturers putting serious money into hydrogen fuel-cell vehicles. These vehicles promised to have a driving range similar to a conventional gasoline-powered automobile, but produce no emissions to pollute the atmosphere.

However, the vehicles faced several daunting challenges, including the lack of a hydrogen fuel infrastructure and the fact that hydrogen is highly flammable and difficult to store.

Volkswagen CEO Martin Winterkorn stated this week that hydrogen fuel cells have failed to live up to promises and are unlikely to become an efficient and cost-effective way to power cars in the near future.

Winterkorn said, "I do not see the infrastructure for fuel cell vehicles, and I do not see how hydrogen can be produced on large scale at reasonable cost. I do not currently see a situation where we can offer fuel cell vehicles at a reasonable cost that consumers would also be willing to pay."

While Volkswagen doesn't see a near-term future with hydrogen vehicles, other manufacturers continue to move forward with the technology. Mercedes-Benz reached a deal with Ford and Nissan-Renault with a goal of selling the first production fuel-cell vehicle starting in 2017.

Back in 2010, a study was published predicting 670,000 fuel cell powered vehicles would be sold annually within a decade. So far, that prediction doesn't seem likely to come true.

Ford has already had experimental vehicles that burn hydrogen and they say that current production lines could incorporate the needed changes with minimal reworking. It's all very cool really. It's all about production, storage and distribution though.

The problem is that making hydrogen from water, then burning the hydrogen is a negative energy equation. You will always use more energy creating the hydrogen than you get from burning it. Hydrogen isn't a fuel, it's an energy storage medium at best.

If it's just an energy storage medium, wouldn't it be better to use a battery that doesn't explode when you look at it sideways?

Dude, every closed process is a "negative energy equation". That is not an issue.

Also the actual efficiency of the process is as bad as you make it sound.Average fuel cells are 40-60% efficient, and electrolysis efficiency can vary from 50% to up to 95%. Combined gives a worst case of 20%, which might sound terrible but is in fact comparable with ICE efficiency. And it is also obvious that above 50% efficiency is possible with the right electrolysers today. That is worse than the 90% figure possible with batteries, but not by too much, and especially not when looking at batteries in realistic situations instead of theoretical max, taking into account self-discharge, temperature effects, limited capacity and recharge time.

And there is still room for future improvement in fuel cells efficiency, with the theoretical maximum given as 83% without heat recapture. Also systems with heat recapture, even though not usable in something like a car currently, already can boost fuel cells to 80-90% efficiency. In the future maybe we can adapt them for cars as well.

The problem with this analysis is that it doesn't take into the fact that gasoline engines effectively get free energy from free oxygen in the atmosphere. Of course, the energy in the oxygen comes from somewhere (plants) but we don't care about that because the cost is free for humans. With electrolysis, even with 95% efficient electrolysis, a lot more than 5% of energy is wasted producing oxygen which can be gotten for free in the atmosphere.